Low-paid wages up 3.75%, with more to come for childcare and health professionals

The Fair Work Commission has boosted the wages of workers on awards by 3.75%, just a touch above the official inflation rate of 3.6%.

The increase will apply to fortnightly pay packets from next month and will only directly apply to the one-fifth of Australian workers on centrally determined awards.

Taking into account other workers who will get pay rises because their pay is linked to awards, the Commission says the decision will affect one in four employees.

Most of the workers affected are part time, most are women, and almost half are casual.

While the decision will maintain real wages in the sense that it is just above the official rate of inflation, the Commission reports that even after it real wages for award-reliant employees will remain lower than they were five years ago.

Workers with mortgages will fall further behind. The employee living cost index (which takes into account changes in mortgage interest rates, unlike the consumer price index) has climbed 6.5% over the past 12 months.

Why didn’t the Commission do more?

The Commission noted that “discretionary expenditure” in the retail and hospitality sectors is down. These two industries alone account for one-third of employees on awards.

Less spending means less ability of employers to fund pay rises.

As well, employers of workers on awards are going to have to find an extra 0.5% of each wage to pay the latest increase in the compulsory superannuation contributions, which comes into effect in July.

The Commission also noted low-paid workers will get help from a number of the measures announced in the budget, including the energy bill rebate and an increase in Commonwealth rent assistance.

There’s more to come, for some

In a year’s time, next July, the Commission has offered hope of extra increases for workers in industries including childcare, where work is largely done by women and has historically been undervalued.

The Commission has already received a report on the effect of gender-based occupational segregation and plans to commence work within weeks on determining the size of the increases needed.

In line for extra increases are

• early childhood education and care workers

• disability home-care workers and social and community services workers

• dental assistants

• medical technicians

• pharmacists

• psychologists

• other health professionals (including Aboriginal health workers)

Importantly, the Commission says it’s reviews won’t begin with a “blank slate”. They will build on the reasoning used to increase the wages of aged-care workers and teachers.

Those decisions found the “invisible” caring skills of interpersonal and contextual awareness, verbal and non-verbal communication and emotion management had been “effectively disregarded” by the simplistic use of masculinised benchmarks such as technical skills, strength and responsibility.

The Commission’s new approach, required by legislation, opens up the possibility of a new era in wage setting in which revaluing work traditionally done by women becomes a lever for lifting the pay of people neglected for decades.

For now, it’s a safe decision

This year’s decision is best described as “safe” – or more accurately, unlikely to feed inflation. It affects around 11% of Australia’s wage bill, and it won’t increase it by much. It will lift the minimum hourly wage from $23.23 to $24.10.

Last year’s bigger increase of 5.75% didn’t flow through to overall wages, which have climbed 4.1% over the year to March, with the rate of increase slowing.

For those on low pay, Monday’s decision will be disappointing. The increase of 3.75% won’t be nearly enough.

But the Commission has maintained the possibility of modest but permanent increases in the pay and status of some of Australia’s lowest paid, but most essential, workers. There’s more to come.